Financial flexibility has been key for consumers during the pandemic, and many have turned to buy now, pay later (BNPL) plans that allow them to pay for purchases in installments. Americans are also spending more time at home during the crisis, prompting them to seek more ways to stay entertained even as they keep a close eye on their budgets. This suggests that merchants selling toys, electronics, music, books and other hobby-related products could significantly boost their conversion rates and in-store success by introducing flexible installment plans into the mix of payment options they offer.
The February edition of PYMNTS’ Buy Now, Pay Later Tracker® examines how consumers are turning to BNPL payment methods for their entertainment-related purchases online and in stores. It also analyzes which consumer segments are particularly interested in these solutions and how merchants can embrace the benefits that these plans provide.
Around The Buy Now, Pay Later Landscape
The ongoing pandemic has forced consumers to accept new financial realities, but many are reluctant to add to their credit card debts. Some are instead turning to installment payment solutions for more flexibility without facing monthly interest charges and fees. The BNPL market’s growth has been significant during the health crisis. More than 13 million American consumers signed up for accounts with installment payment solution provider Afterpay as of November, for example. The BNPL provider facilitated more than $770 million in U.S. sales during the same month, more than triple the amount processed in November 2019.
Digital shopping channels remain in high demand as the pandemic continues. Still, many consumers are growing more comfortable with in-store safety measures and are beginning to return to brick-and-mortar stores to make purchases. Research also shows that they seek access to their preferred payment methods — including BNPL solutions — when they make such trips. A recent PYMNTS survey of 2,992 consumers found that those who paid using installment options at the physical point of sale (POS) bought more items and spent more than those who used other payment methods. BNPL users made five in-store purchases in the week before the survey, for example, compared to just three purchases for consumers who used other payment options.
Residents of New Delhi, India, have long used BNPL solutions to buy pricy electronic items such as smartphones, but the payment method is also beginning to gain favor for smaller purchases of everyday items such as clothing, musical instruments, kitchen appliances and hair treatment products. Data from one India-based payment solutions provider found that merchants have seen an increase in the use of BNPL solutions in other big cities as well, including Mumbai and Bengaluru. The data revealed that there had been a nationwide shift in consumers’ payment preferences, with small businesses that adopt BNPL solutions seeing more conversions.
For more on these and other stories, check out the Trackers News & Trends section.
Tambo Teddies On Boosting Sales And Expanding Its Reach With BNPL Solutions
BNPL options are increasingly being offered by retailers outside the apparel sector, including those in the home decor, food, fragrances and toy spaces. Australia-based Tambo Teddies began offering installment payments last summer to boost its global visibility and help it convert more customers, for example. In this month’s Feature Story, Alison Shaw, Tambo Teddies’ co-owner, discussed why the company chose to implement BNPL payments and how replacing its standard layaway program with such options has given it a notable sales boost.
To get the full story, download the Tracker.
Consumers stuck at home during the pandemic are buying more entertainment products for themselves and their children. Still, many are staying focused on the family budget and modifying their purchasing habits as the health crisis strains their finances. Offering flexible installment payment plans could help them stretch their dollars and splurge for products to keep themselves and their families occupied. This month’s Deep Dive examines how the pandemic has shifted consumers’ spending on toys, games and hobby purchases and why offering BNPL solutions could help merchants drive more entertainment-related purchases.
Read the full Deep Dive in the Tracker.
The Buy Now, Pay Later Tracker® is done in collaboration with Afterpay, and PYMNTS is grateful for the company’s support and insight. PYMNTS.com retains full editorial control over the following findings, methodology and data analysis.
Selected by Fintech Tube